Dancing with the stores: Lowes Foods is counting on its well-traveled CEO to defend its Tar Heel turf against larger supermarket rivals.

• Author: Dunn, Erin

Tim Lowe isn't afraid to do the chicken dance in the middle of a crowded grocery store. He's in mid-sentence, talking about fresh produce, when the music starts. As a crowd gathers beneath a giant blue and yellow chicken chandelier, Lowe hustles over to take his place. He flaps his arms, shimmies and claps his hands. Exchanging high-fives, he heads back to brag about the original song commissioned by the supermarket chain he leads. He then plugs pizza crust imported from Italy and batter made from local sources that's poured onto poultry in the store's adjacent Chicken Kitchen. "It always starts with the quality of our product," he says.

Lowe, the president of Winston-Salem-based Lowes Foods, is in Pinehurst to celebrate the company's newly remodeled grocery. The day has the trappings of a party. Near The Cakery bakery area, there's a large, hanging cutout cake where children can "blow out" the candles--which retract when an employee discreetly presses a button. The place is packed with executives, vendors peddling samples, and customers.

The store is starkly different from its predecessor, which opened in 1997. Gone are harsh, fluorescent lights and cookie-cutter displays. In their places are industrial red pendants and colorful sections labeled Beer Den, Blue Ridge Bakery, Outer Banks Seafood and SausageWorks--complete with a crazy professor who concocts more than 30 flavors. Pick & Prep produce lets customers select their own vegetables to be sliced, diced or julienned by Lowes' staffers while they shop.

More traditional aisles occupy the center of the building, which looks like a giant greenhouse. The store was designed "so you could experience it the way you want to experience it," Lowe says. "You can go in and out quickly, you can sample or you can hang out."

It's a mad experiment, perhaps, with nothing less than the company's future at stake. Traditional grocery stores such as 64-year-old Lowes Foods and the Food Lion chain, started in Salisbury in 1957, are besieged by faster-growing, low-cost competitors including Wal-Mart Stores and German discounter ALDI and upscale chains such as Whole Foods Market and Greensboro-based The Fresh Market. Food Lion's response is to bulk up; its Belgian owner Delhaize Group is merging with Dutch rival Ahold in a $10.4 billion deal being scrutinized by regulators. Lowes' revitalization strategy is less well-known.

The 95-store chain is a division of Hickory-based wholesale-food distributor Alex Lee Inc., one of North Carolina's largest private companies and owned by the George family, who have shown patience since acquiring the retail chain in 1984. Lowe, who isn't related to the company's founder, wouldn't disclose revenue. A comparison with Ingles Markets Inc., based in Asheville, suggests Lowes turns over more than $1.5 billion annually. Lowes' revenue makes up a big chunk of Alex Lee, which sold its $600 million restaurant-food distribution business in 2012. It retains Merchants Distributors Inc., a food distributor for more than 600 groceries from Ohio to Florida.

BUT LOWES IS A FRACTION OF THE SIZE of some rivals in the consolidating supermarket industry, such as Cincinnati-based The Kroger Co., which reported 2014 revenue of $108.5 billion and has more than 2,600 stores, including one under construction a block from the Pinehurst store where Lowe is dancing. The new grocery will be a Harris Teeter, part of the Matthews-based chain acquired by Kroger last year in a $2.5 billion deal. Lowes knows its rival well, having mostly retreated from the Charlotte region three years ago, swapping 10 locations in exchange for six Harris Teeter stores in western North Carolina--plus $26.5 million. (Lowes still has stores in Harrisburg and Mooresville, near Charlotte.)...